Chris Barber pointed me to this problem, so I thought I should open it. The current logic on the CLI uses the 8th installed Android to determine the default SDK. This can be problematic since the 8th installed sdk can vary depending on the number of SDKs you have installed.
The default minimum should be set to Android 2.2. The logic should be improved so that by default it is 2.2 consistently.
Chris Barber - let me know if I got it wrong